FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT ("Agreement") is made as of the 21st day of
October, 1999, effective as of October 15, 1999 (the "Effective Date") among
METROTRANS CORPORATION, a Georgia corporation, ("Borrower"), BUS PRO, INC., a
Georgia corporation, ("Guarantor") and BANK OF AMERICA, N.A., successor to
NationsBank, N.A. ("Lender").
R E C I T A L S:
A. Borrower is indebted to Bank (the "Loan") as evidenced by that
certain Amended and Restated Note (the "Note"), dated as of April 12, 1999,
in the original principal amount of $23,000,000.00 and made payable to Bank
and that certain Loan Agreement Between Metrotrans Corporation and
NationsBank, N.A., dated as of September 5, 1997, as amended (the "Loan
Agreement").
B. The Note is secured by, among other things, three Deeds to Secure
Debt and one Mortgage and Security Agreement executed by Borrower, related to
certain real property more particularly described therein (the "Property"),
recorded as follows:
(i) on April 14, 1999 in Book 3848, Page 013, public records of
Xxxxxxx County, Georgia ("Xxxxxxx Co. Deed to Secure Debt");
(ii) on April 16, 1999 in Book 1645, Page 259, public records of
Spalding County, Georgia ("Spalding Co. Deed to Secure Debt");
(iii) on April 15, 1999 in Book 3266, Page 322, public records of
Xxxxx County, Georgia ("Xxxxx Co. Deed to Secure Debt");
(iv) on April 15, 1999 in Book 5728, Page 3282, public records of
Orange County, Florida ("Orange Co. Mortgage")
(collectively, the "Mortgages").
C. The Note is further secured by those certain Security Agreements
dated April 12, 1999, executed by Borrower and Guarantor, covering certain
property more particularly described therein ("Security Agreements").
D. The Note is further secured by that certain Stock Pledge
Agreement ("Stock Pledge") executed by Borrower pledging to Bank certain
shares ("Pledged Securities") of capital stock described more fully therein.
E. The Note is further secured by those certain UCC-1 Financing
Statements executed by Borrower and recorded as follows:
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(i) In the Superior Court, Spalding County, Georgia, on April 13,
1999, file no. 000-0000-000;
(ii) Secretary of State for the State of Illinois on April 13,
1999, file no. 4019583;
(iii) Ohio Secretary of State on April 13, 1999, file no.
APO133614;
(iv) Xxxxxxxx County, Ohio on May 3, 1999, file no. 99-88091;
(v) Texas Secretary of State on April 13, 1999, file no. 99-
073700;
(vi) Secretary of State for California on April 13, 1999 file no.
9911160423;
(vii) Secretary of State for Colorado on April 13, 1999 file no.
19992020867;
(viii)Tennessee Secretary of State on April 13, 1999, file no. 991-
001553;
(ix) Department of Treasury, State of New Jersey on April 20,
1999, file no. 1900718;
(x) State of Maryland Dept. of Assessments and Taxation on April
13, 1999, file no. 1000007852000000;
(xi) Florida Secretary of State on April 13, 1999, file no.
990000080981;
F. The Note is further secured by those certain UCC-1 Financing
Statements executed by Guarantor and recorded as follows:
(i) In the Superior Court, Spalding County, Georgia, on April 13,
1999, file no. 000-0000-000;
(ii) Secretary of State for the State of Illinois on April 13,
1999, file no. 4019582;
(iii) Ohio Secretary of State on April 13, 1999, file no. PO133613;
(iv) Xxxxxxxx County, Ohio on May 3, 1999, file no. 99-88092;
(v) Texas Secretary of State on April 13, 1999, file no. 99-
073701;
(vi) Secretary of State for California on April 13, 1999 file no.
9911160426;
(vii) Secretary of State for Colorado on April 13, 1999 file no.
19992020868;
(viii) Tennessee Secretary of State on April 13, 1999, file no.
991-001554;
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(ix) Department of Treasury, State of New Jersey on April 20,
1999, file no. 1900720;
(x) State of Maryland Dept. of Assessments and Taxation on April
13, 1999, file no. 1000007851000000;
(xi) Florida Secretary of State on April 13, 1999, file no.
990000080982;
G. The Loan is guaranteed by Guarantor pursuant to that certain
Guaranty dated as of April 12, 1999 ("Guaranty").
H. The Note, the Loan Agreement, the Mortgages, the Security
Agreements and all other written documents executed in connection therewith,
together with any written renewals, modifications or extensions thereof are
collectively referred to hereinafter as the "Loan Documents." The Property
and all other Collateral now or hereafter granted, pledged, assigned or
otherwise conveyed by Borrower or any Subsidiary to Bank are collectively
referred to hereinafter as the "Collateral".
I. Borrower is in default under the Loan Documents. Borrower,
Guarantor and Bank have heretofore entered into those certain Forbearance
Agreements dated as of August 18, 1999, and September 30, 1999, pursuant to
which Bank agreed to forbear from exercising its rights and remedies under
the Loan Documents, subject to the terms and conditions set forth therein,
until October 15, 1999. Borrower and Guarantor have requested that Bank
continue to forbear from exercising its rights and remedies under the Loan
Documents for a period of time as specified herein in reliance upon the
covenants, representations, and warranties of Borrower and Guarantor herein
and for other consideration.
J. Any terms used herein as defined terms, as indicated by initial
capitalization thereof, and not otherwise defined shall have the meanings
ascribed to such terms in the Loan Agreement.
A G R E E M E N T:
For and in consideration of the mutual covenants herein, Ten Dollars
($10.00), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Bank agree as
follows:
1. Recitals. The foregoing recitals are confirmed by the parties as
true and correct and are incorporated herein by reference. The recitals are
a substantive, contractual part of this Agreement.
2. No Waiver. The execution, delivery and performance of this
Agreement by Bank and the acceptance by Bank of performance of Borrower and
Guarantor hereunder (a) shall not constitute a waiver or release by Bank of
any default that may now or hereafter exist under the Loan Documents, (b)
shall not constitute a novation of the Loan Documents as it is the intent of
the parties to modify the Loan Documents as expressly set out herein and (c)
except as expressly provided in this Agreement, shall be without prejudice
to, and is not a waiver or release of, Bank's rights at any time in the
future to exercise any and all rights conferred upon Bank by the Loan
documents or otherwise at law or in equity, including
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but not limited to the right to institute foreclosure
proceedings against the Property and/or institute collection or arbitration
proceedings against Borrower and/or Guarantor and/or to exercise any right
against any other person or entity not a party to this Agreement.
3. Forbearance. So long as this Agreement is not terminated earlier
as provided herein, Bank agrees not to foreclose or attempt to foreclose any
collateral securing the Note, institute suit or arbitration proceedings for
collection of the Note against Borrower, or exercise any other remedies
available to it under the Loan Documents or under applicable law from the
Effective Date until December 31, 1999 (the "Termination Date"). The period
of time from the Effective Date through the Termination Date shall be
referred to as the "Forbearance Period". If all defaults under the Note and
Loan Documents are not cured on or before the Termination Period or the
earlier termination of this Agreement, then Bank may seek to foreclose upon
any collateral for the Note and to exercise any other remedies to which Bank
may be entitled under the Loan Documents or applicable law to collect amounts
due under the Note or other Loan Documents. Borrower and Guarantor agree
that neither Borrower nor Guarantor will, during the Forbearance Period,
initiate any action of any kind against Bank with respect to the Note,
exercise any remedy available under the Loan Documents or otherwise, or make
any type of demand upon Bank with respect to the indebtedness evidenced by
the Note. Borrower warrants and represents that
Borrower has engaged Legacy Securities Corporation as an investment banker or
financial advisor for the express purpose of assisting Borrower in structuring
a proposal for refinancing or otherwise satisfying the
indebtedness secured by the Loan Documents and that Borrower's Board of
Directors has approved such engagement. As additional consideration for the
Bank's agreement to forbear, Borrower and Bank agree that in the event a
bankruptcy case under Chapter 11 of the Bankruptcy Code (11 U.S.C. 101 et
seq. ) is commenced by or against Borrower at any time after the execution of
this Agreement, Borrower agrees that notwithstanding the provisions of 11
U.S.C. 1121(b), Bank shall have the right to file a plan of reorganization
prior to the expiration of the 120 day period set forth in that section and
Borrower hereby expressly waives its exclusive rights under that section
solely as to Bank. Borrower agrees to consent to an Order modifying the
exclusive periods of 11 U.S.C. 1121 to effectuate the intent of this
Paragraph.
4. Reporting and Maintenance Requirements. Borrower and Bank agree
that, as a condition to the continuation of Bank's forbearance hereunder:
(a) Borrower agrees to provide to Bank certified copies of all
management or asset marketing contracts entered into with respect to the
Collateral and the operations of Borrower with respect to the Collateral (any
of the abovesaid documents currently existing to be supplied to Bank as of
the date hereof and any of the abovesaid documents entered into after the
date hereof to be supplied to Bank immediately upon the execution thereof).
Borrower further agrees to provide to Bank any purchase and sale agreement or
offer to purchase all or any portion of the Property or any other Collateral
immediately upon Borrower's receipt thereof.
(b) Contemporaneously with the execution of this Agreement,
Borrower has delivered to Bank projections (the "Projections") of its
operating cash flow from manufacturing for the remainder of calendar year
1999 and a report (the "Sales Report") on the status of sales of the parcels
of Property and other Collateral listed on Exhibit "A" attached hereto and by
this reference incorporated herein (the "Non-Essential Assets"). In addition
to all other financial
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reporting requirements under the Loan Documents,
Borrower agrees, on or before Wednesday, October 27, 1999 and on or before
the same day of each and every subsequent week during the Forbearance Period,
to provide Bank with weekly updates (for the week ending 4 days prior
thereto) of the Projections and the Sales Report for the Collateral in such
detail as Bank may reasonably require.
(c) Notwithstanding anything in the Loan Documents to the
contrary, Borrower shall maintain at all times:
(i) Eligible Receivables of the Borrower and its
Subsidiaries of not less than $1,400,000; and
(ii) Inventory Value of Eligible Essential Inventory
(hereinafter defined) of not less than $5,300,000.
For purposes of this Agreement, "Eligible Receivables" shall mean all
Receivables of Borrower and its Subsidiaries as of the measuring date;
provided, however, that unless otherwise approved in writing by Bank no
Receivable shall be deemed an Eligible Receivable unless it meets all of the
following requirements:
(a) such Receivable is owned by Borrower or a Subsidiary and represents a
complete bona fide transaction which requires no further act under any
circumstances on the part of Borrower or such Subsidiary to make such
Receivable payable by the account debtor; (b) such Receivable is not unpaid
more than ninety (90) days after the date of the original invoice date; (c)
such Receivable does not arise out of any transaction with any Subsidiary,
Affiliate, creditor, lessor or supplier of a Borrower; (d) if the account
debtor with respect thereto is located outside of the United States of
America, the goods which gave rise to such Receivable were shipped after
receipt by a Borrower from the account debtor of an irrevocable letter of
credit that has been confirmed by a financial institution acceptable to Bank
and is in form and substance acceptable to the Bank, payable in the full face
amount of the face value of the Receivable in U.S. Dollars at a place of
payment located within the United States and has been duly delivered to Bank;
(e) such Receivable is not subject to the Assignment of Claims Act of 1940,
as amended from time to time, or any applicable law now or hereafter existing
similar in effect thereto, as determined in the sole discretion of Bank, or
to any provision prohibiting its assignment
or requiring notice of or consent to such assignment; (f) the account debtor
with respect to such Receivable is not insolvent or the subject of any
bankruptcy or insolvency proceedings of any kind or of any other proceeding
or action, threatened or pending, which might, in Bank's sole judgment, have
a materially adverse effect on such account debtor; (g) the goods the sale of
which gave rise to such Receivable were shipped or delivered to the account
debtor on an absolute sale basis and not on a xxxx and
hold sale basis, a consignment sale basis, a guaranteed sale basis, a sale or
return basis or on the basis of any other similar understanding, and such
goods have not been returned or rejected; (h) such Receivable is evidenced by
an invoice or other documentation in form acceptable to Bank containing only
terms normally offered by Borrower, and dated the date of shipment; (i) such
Receivable is a valid, legally enforceable obligation of the account debtor
with respect thereto and is not subject to any present, or contingent,
offset, deduction or counterclaim, dispute or other defense on the part of
such account debtor; (j) such Receivable is not evidenced by chattel paper or
an instrument of any kind; (k) if such Receivable arises from the performance
of services, such services have been fully performed; and (l) such Receivable
is subject to no Lien whatsoever other than a Permitted Lien, and the goods
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giving rise to such
Receivable were not, at the time of the sale thereof, subject to any Lien
other than a Permitted Lien.
For purposes of this Agreement, "Eligible Essential Inventory" shall mean all
finished bus Inventory completed no more than ninety (90) days from the
applicable measuring date plus all raw materials Inventory exclusive of the
non-essential raw materials listed on Exhibit "B" attached hereto and by this
reference incorporated herein.
5. Payments.
(a) Borrower and Bank acknowledge and agree that Borrower shall use
commercially reasonable efforts to sell the Non-Essential Assets during the
term of this Agreement. Borrower covenants and agrees to remit to Bank the
Net Sale Proceeds (hereinafter defined) in connection with any sale of Non-
Essential Assets and as a condition to the release of Bank's security
interest in such property, which Net Sale Proceeds shall be applied toward
the then outstanding principal balance of the Loan. Notwithstanding the
foregoing, Bank shall have no obligation to release any parcel of Property or
any other Collateral unless the Net Sale Proceeds with respect to such
Collateral are equal to or greater than any release price therefor to which
Borrower, Guarantor and Bank have agreed by separate agreement in writing.
Such principal paydown shall permanently reduce the Commitment by the amount
of such paydown. For purposes of this Agreement, "Net Sale Proceeds" shall
be defined as the gross sale proceeds less such
closing costs actually incurred, including reasonable attorney's fees,
commissions, amounts applied by Bank or Borrower to payoff any holder of a
purchase money security interest therein, transfer taxes, as Bank in its
discretion deems reasonable, and any other expenses as Bank in its discretion
deems reasonable. As a condition to Bank's continued forbearance, the
principal balance of the Loan and the Commitment must be reduced as follows
during the term of this Agreement, out of the Net Sale Proceeds:
Minimum Cumulative Principal
Reduction as of the
Measuring Period End of Such Period Payment Due Date
---------------- -------------------------------------- ----------------
October 15-October 29, 1999 $1,080,000 November 3, 1999
October 30-November 12, 1999 $3,204,000 November 17, 1999
November 13-November 26, 1999 $3,968,000 December 1, 1999
November 27-December 10, 1999 $4,368,000 December 15, 1999
December 11-December 24, 1999 $5,328,000 December 29, 1999
No notice, grace or cure period set forth in the Loan Documents shall apply
to any payment due date set forth above.
(b) Borrower agrees to pay Bank contemporaneously with the execution
of this Agreement $2,500 of Bank's attorney's fees and expenses related to
this Agreement, and $35,000 of the fees and expenses of The Recovery Group
incurred related to this Agreement. Borrower agrees to reimburse Bank prior
to the Termination Date for Bank's attorneys' fees and expenses, including
without limitation the fees and expenses of The Recovery Group, incurred
related to the Agreement, the Loan Documents, the Property and other
Collateral. Borrower further covenants and agrees to make payments as
provided under the Note and Loan Documents subsequent to the date hereof.
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(c) Borrower further covenants and agrees to pay in full on or
before the date hereof (or, if earlier, prior to any exercise of the Fi. Fa.
(hereinafter defined) which would impair Bank's Collateral), and provide
evidence satisfactory to Bank of such payment, of all 1998 ad valorem taxes
currently due and owing, together with all interest and penalties then due,
on Borrower's real property located Xxxxx County, Georgia (Map Reference No.
07302028001) which has been conveyed as security for the Loan pursuant to the
Xxxxx Co. Deed to Secure Debt, and to cause the release of that certain Xxxxx
County Tax Fi. Fa. filed in GED Book 150, page 99, Xxxxx County, Georgia
Records (the "Fi. Fa."). Borrower further covenants and agrees to pay in
full on or before the delinquency date thereof (and in any event prior to any
exercise of any writ of fieri facias or other action thereon which would
impair Bank's Collateral), all 1999 ad valorem taxes currently due and owing,
together with all interest and penalties then due.
6. Acknowledgment of Default, Amounts Due and Maturity Date. Bank
and Borrower acknowledge that as of the Effective Date the outstanding unpaid
principal balance of the Note, prior to giving effect to any principal
paydown to be made by Borrower during the Forbearance Period in connection
with this Agreement, is $22,329,999.70 and the accrued, unpaid interest under
the Note as of the Effective Date, after giving effect to the interest
payment made as of the Effective Date hereof, is $89,009.86. Borrower and
Guarantor also acknowledge that costs and expenses, including without
limitation attorneys' fees and appraisal fees, are owed under the Note in
addition to principal and accrued interest. The maturity date for the Note is
May 31, 2000. Borrower and Guarantor waive any and all rights to other
notice of payment default or any other default, protest and notice of
protest, dishonor, diligence in collecting and the bringing
of suit or arbitration proceedings against any party, notice of intention to
accelerate, notice of acceleration, demand for payment and any other notices
whatsoever regarding the Note or the other Loan Documents, and further waive
any claims that any notices previously given are insufficient for any reason.
7. Limitation on Interest. No provision of this Agreement, the
Note, any of the other Loan Documents, or any instrument evidencing or
securing the Note, or otherwise relating to the indebtedness evidenced by the
Note, shall require the payment or permit the collection, application or
receipt of interest in excess of the maximum rate permitted by applicable
state or federal law. If any excess of interest in such respect is herein or
in any such other instrument provided for, or shall be adjudicated to be so
provided for herein or in any such instrument, the provisions of this
paragraph shall govern, and neither Borrower nor any endorsers of the Note
nor their respective heirs, personal representatives, successors or assigns
shall be obligated to pay the amount of such interest to the extent it is in
excess of the amount permitted by applicable law. It is expressly stipulated
and agreed to be the intent of Borrower and Bank at all times to comply with
the usury and other laws relating to the Note and the
other Loan Documents and any subsequent revisions, repeals or judicial
interpretations thereof, to the extent applicable to the Note or the other
Loan Documents. In the event Bank ever receives, collects or applies as
interest any such excess, such amount which would be excessive interest shall
be applied to the reduction of the unpaid principal balance of the Note, and,
if upon such application the principal balance of the Note is paid in full,
any remaining excess shall be paid forthwith to Borrower and the provisions
of the Note, the other Loan Documents and any demand or other charging
document shall immediately be deemed reformed and the amounts thereafter
collectible thereunder reduced, without the necessity of execution of any new
document, so as to comply with the then applicable law, but so as otherwise
to permit the recovery of the fullest amount called for thereunder. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the
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